South Korean Company’s Planned Expansion Aims to Cut Production Costs

SEOUL—Samsung Electronics Co. plans to invest up to $3 billion to expand mobile-phone production in Vietnam, one of the company’s boldest moves to combat low-cost Chinese rivals who are eating into its smartphone business.

The expansion could boost capacity significantly at Samsung’s newest mobile-phone factory in Vietnam, pushing down the company’s smartphone-manufacturing costs and bolstering profit margins. The decision is the latest sign that South Korean manufacturing is joining the shift to lower-wage locales from China—even...